E&O Risk Management: Meeting the Challenge of Change Reducing E&O Exposure in Placement of Crop Insurance

Overview Unique nature of crop program can create additional E&O exposure Review: Overview of common crop policy Important deadlines Crop forms Assist agents in recognizing where potential errors or omissions are more likely to occur during the process Reducing E&O Exposure in Placement of Crop Insurance

Common Crop Policy Risk Management Agency (RMA) administers the Federal Crop Insurance Program Crop policy form is similar to traditional P&C forms Multi-peril crop insurance policy (MPCI) is continuous until cancelled Renews as is unless change made prior to sales closing date Reducing E&O Exposure in Placement of Crop Insurance

Application/Coverage Change Form Application must include: Coverage level Coverage elections Coverage type Coverage endorsements for each crop year Information must be submitted no later than the sales closing date Reducing E&O Exposure in Placement of Crop Insurance

What is covered? Adverse weather conditions Fire (natural causes) Insects Earthquake Decline in harvest price Plant disease Wildlife Earthquakes Volcanic eruption Failure of irrigation water supply Understand the coverage you are selling – dabbling invites E&O claims Dates are critical Reducing E&O Exposure in Placement of Crop Insurance

What is NOT covered? Negligence, mismanagement or wrongdoing by the insured Failure to follow recognized good farming practices Water that is contained by or within structures that are designed to contain a specific amount of water such as dams Failure or breakdown of irrigation equipment Failure to carry out a good irrigation practice Any cause of loss that results in damages that are not evident or would not have been evident during the insurance period Upfront time with the customer on what is and is NOT covered can prevent E&O claims and aid in defense of one. Reducing E&O Exposure in Placement of Crop Insurance

Acreage Reporting Date Important Deadlines Sales Closing Date What: Last day to apply for crop coverage When: March 15th for common spring crops and September 30th for common fall/winter crops Refer to RMA guidelines for your specific region and crop. Final Planting Date What: The last date for a specific crop to be initially planted in order for it to be insured for the full production guarantee or amount of insurance per acre. When: Changes each year for each crop. Check regional guidelines for the specific date. Acreage Reporting Date What: The last date to report the acreage planted and various other information on the Acreage Report. When: Depends on the crop being planted. Refer to your regional guidelines for the date. Missed deadlines for any of these can result in no coverage for that crop that year. Reducing E&O Exposure in Placement of Crop Insurance

Important Deadlines Date to File Notice of Crop Damage What: Claim for indemnity due to crop damage or revenue loss. When: Crop carrier should be placed on notice of crop damage or potential crop damage no later than 72 hours after discovery of damage for a planted crop but not later than 15 days after the insurance period; if no crop damage or loss of production but a revenue loss on a revenue protection plan, no later than 45 days after the latest date the harvest price is released. For prevented planting claims, no later than 72 hours after the final planting date or it is determined that replanting is not possible during the late planting period. End of Insurance Period What: Last date the insurance coverage ceases for the crop. When: Total destruction of the insured crop; harvest of the insured crop; final adjustment of a loss on a unit; the calendar date contained in the crop provisions or special provisions; the end of the insurance period; or abandonment of the insured crop. Customers need to know these dates to insure coverage. Reducing E&O Exposure in Placement of Crop Insurance

Production Reporting Date Important Deadlines Payment Due Date What: Last day to pay the premium without being charged interest. When: Premium is not owed in advance of the MPCI policy providing coverage until after harvest. If there is an indemnity payment owed to the named insured, the carrier will automatically reduce this indemnity payment by the premium owed. Production Reporting Date What: Last day to report production for Actual Production History; Actual Revenue History, Revenue Protection, and Revenue Protection with Harvest Price Exclusion Option. When: By the earlier of the acreage report or 45 days after the cancellation of the policy. Reducing E&O Exposure in Placement of Crop Insurance

Application/Coverage Change Forms Used for new policies and each year for renewal policies that have changed. Completed and SIGNED by March 15th each year for spring crops, September 30th for winter. Three weeks for agent to send to carrier. Risk Management Tips: Be organized and proactive. Have a plan for contacting customers well in advance. Always inquire about changes in customer operations. Reducing E&O Exposure in Placement of Crop Insurance

Application/Coverage Change Forms With large amount of information required, applications are ripe for E&O claims. Due to RMA’s strict enforcement deadline, applications are set in stone. One missed box can have a great impact on coverage! Claim Examples and Risk Management Tips Reducing E&O Exposure in Placement of Crop Insurance

Acreage Reporting Form Submitted for each insured crop on or before acreage reporting date. Lists the amount of acres of each crop planted. Filing of Acreage Report is the trigger for attachment of coverage for the crops planted. Due 30 days after the final planting date established by the RMA for that crop in your region. Check the regional guidelines for the exact date for your region. Reducing E&O Exposure in Placement of Crop Insurance

Acreage Reporting Form Prime place for errors. Customer provides FSA 578 and aerial map of certified acres to the agency. Acreage Report and FSA must match exactly. Omitted acreage can impact indemnity payment on a crop or revenue loss. PITFALL! - Be sure to accurately key data from the FSA 578 to carrier’s acreage report exactly. Reducing E&O Exposure in Placement of Crop Insurance

Acreage Reporting Form Omission of acreage, calculation errors, and clerical errors by the agency can be corrected if no claim has been filed prior to the request to correct the amount of acreage Don’t delay if any inaccuracies noticed Claim Examples and Risk Management Tips Important: Always have the named insured review and sign completed form prior to submission. Reducing E&O Exposure in Placement of Crop Insurance

Summary of Coverage Equivalent of Declarations Page Acreage Report is the source of information Last document in MPCI policy cycle prior to harvest Claims Example and Risk Management Tips Important: Agent should review Summary and compare to application and Acreage Report. Send a copy to named insured immediately. Reducing E&O Exposure in Placement of Crop Insurance

Production Report Records the annual production of each crop After harvest, insured receipts or reports to prepare Production Report Must be provided to the agent Determines if indemnity payment is owed and the average yield for next crop insurance year Agent has duty to forward production information to carrier Assigned Yield vs. Actual Yield Reducing E&O Exposure in Placement of Crop Insurance

Crop Provisions Each type of insurable crop has specific provisions applicable to it “Nuts and bolts” of coverage for specific crop Agents need to be familiar with specific provisions to avoid misrepresentation claims Reducing E&O Exposure in Placement of Crop Insurance

Policy Endorsements/Options Be familiar with policy endorsements and options Must be applied for on or before sales closing date: Examples: Catastrophic Risk Protection Endorsement; High-Risk Alternate Coverage Endorsement (HR-ACE); Prevented Planting Endorsement; Green Snap Endorsement Claim Example and Risk Management Tip Reducing E&O Exposure in Placement of Crop Insurance

Appealing Claim Disputes Appeals process regarding any decision made by the Federal Crop Insurance Corporation Information available on RMA website or ask your underwriter E&O carrier may be able to assist with the matter Reducing E&O Exposure in Placement of Crop Insurance

Crop Risk Management Checklist Available at www.iiaba.net/eohappens or in student materials.   Internal Crop Risk Management Checklist Customer Name: Date: Was each question on the application gone over with the named insured prior to completing the application?  Yes  No 2. Was “New Producer” information shared and explained with the named insured? 3. Did the named insured review the application prior to initialing each page and signing the application? 4. Were all changes made prior to obtaining the signature from the named insured? Reducing E&O Exposure in Placement of Crop Insurance